Apple Found Guilty In E-Book Conspiracy Case

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NEW YORK (AFP) – A U.S. judge ruled Wednesday that Apple violated antitrust law in a price-fixing case, saying the company “conspired to restrain trade” with publishers to boost the price of e-books.

In a sweeping ruling, U.S. District Judge Denise Cote, who presided over a bench trial in New York, said in her opinion that “Apple is liable here for facilitating and encouraging the (publishers’) collective, illegal restraint of trade.”

She ordered a new hearing to determine damages.

Cote rejected all the arguments from Apple, which claimed its entry into the e-book market promoted competition. The judge also determined that comments from late chief executive Steve Jobs proved the government’s allegations of a conspiracy.

The trial focused on a six-week period in late 2009 and early 2010 during which Apple negotiated contracts with publishers ahead of its iPad launch and proposed a new and more profitable business model.

Publishers at the time were unhappy with Amazon’s practice of charging $9.99 for bestsellers but were unable to effect change until Apple helped organize the group, Cote said.

“Understanding that no one publisher could risk acting alone in an attempt to take pricing power away from Amazon, Apple created a mechanism and environment that enabled them to act together in a matter of weeks to eliminate all retail price competition for their e-books,” Cote said.

“The evidence is overwhelming that Apple knew of the unlawful aims of the conspiracy and joined that conspiracy with the specific intent to help it succeed.”

Each of the five publishers originally named in the U.S. government’s civil lawsuit settled the case, leaving Apple to stand trial alone.

Apple’s chief executive Tim Cook had said ahead of the trial that the California firm would not settle, claiming it had done nothing wrong but was merely pursuing normal business practices.

Apple said it would appeal the ruling.

“Apple did not conspire to fix ebook pricing and we will continue to fight against these false accusations,” said an Apple spokesman in a statement.

“When we introduced the iBookstore in 2010, we gave customers more choice, injecting much needed innovation and competition into the market, breaking Amazon’s monopolistic grip on the publishing industry. We’ve done nothing wrong and we will appeal the judge’s decision.”